Supreme Court upholds broad reach of bank fraud law

WASHINGTON (AP) — The Supreme Court on Monday upheld the broad reach of a federal law prohibiting bank fraud, a ruling that gives the government more leeway to prosecute financial crimes.

The unanimous came in the case of a California man who illegally siphoned about $307,000 out of a Taiwanese businessman's Bank of America bank account.

Lawrence Shaw argued that he wasn't guilty of bank fraud because he only intended to cheat the bank customer, not the bank itself. But Justice Stephen Breyer, writing for the court, said the bank has an interest in preserving the money in its customers' accounts.

"A scheme fraudulently to obtain funds from a bank depositor's account is also a scheme fraudulently to obtain property from a financial institution," Breyer said.

Breyer said the law applied to Shaw's actions because Shaw knew the bank held the customer's deposits and he misled the bank to steal the money. It did not matter that the bank itself suffered no financial loss, he said.

The case resolves a split on the issue among lower courts. The justices sent the case back to a federal appeals court to decide whether the jury instructions in Shaw's case were correct.

The Obama administration had defended the law, saying it is modeled on mail and wire fraud statutes that are not limited to crimes where the goal is to cause financial losses.